Wednesday, March 07, 2007

MARKET RECAP

We were making decent progress till the markets took a dive in the last hour. Kind of tells you how many people want to be long. Homebuilder D.R. Horton CEOs comments that '2007 is going to suck' probably played a large part. Perhaps the moderate to sluggish economic growth around the country as revealed by the Fed beige book also played a role. Nonetheless, I expect tomorrow to be a red day all around unless, Blackstone buys the S&P 500 at a 30% premium.

The oil sector did really well today. As to how long this strength will last I have no idea. Its notable that the oil sector has the least correlation, to the overall markets.

The Bank of England and the European Central Bank will meet tomorrow to decide interest rate changes. A rate increase by the BOE or the ECB would likely have a bearish effect on the overall markets.

These were the big hedge fund losers in February. The guys ( and gals) who got caught with their pants down so to speak. Question: How can you be a hedge fund without being hedged ? Seems to be the case these days with Amaranth, Red Kite and so on.

The mortgage blowup has spread beyond subprime. Reminds me of a memorable Dennis Gartman quote " When they raid the house of ill repute, the good girls and the piano player also go to jail".